In court, Elon Musk accuses OpenAI of trying to 'have your cake and eat it, too'

Elon Musk, of Tesla, SpaceX and DOGE fame, is testifying in court for a second day on Wednesday in his lawsuit against OpenAI and its CEO Sam Altman, a case that could alter the competitive landscape for artificial intelligence.

The case hinges on whether OpenAI, founded by Musk, Altman and a handful of others in 2015, strayed from its original mission as a non-profit developing AI for the benefit of humanity when a for-profit arm was created to raise funding to supercharge its research.

On Tuesday, lawyers for Musk and OpenAI delivered opening statements that painted starkly different pictures. Musk's team argued that Altman and OpenAI President Greg Brockman "stole a charity" and enriched themselves when they created the for-profit arm of OpenAI that has since ballooned in valuation.

OpenAI's lead lawyer said this is a simple case of sour grapes, with Musk seeking to attack a rival because he is unhappy that OpenAI thrived after he left in 2018 following a disagreement about leadership. He launched his own competing company, xAI, in 2023.

The for-profit arm of OpenAI was created to help raise money and attract talent. It is a subsidiary of the not-for-profit OpenAI Foundation.

On the stand on Wednesday, under questioning from his own attorney, Musk said establishing a company like OpenAI as a non-profit gave it "the moral high ground. I guess there's sort of a halo effect." Also, he added, "there's some value" in having a lab that develops "digital superintelligence" to be non-profit.

"But what you can't do is have your cake and eat it too," reaping the "good association" with being a non-profit and then switching to a for-profit model, Musk said.

Musk said his faith in OpenAI following its original mission had three phases. The first was when he was "enthusiastically supportive," the second when he was "a little uncertain" that OpenAI was following its original mission, and a third developed once he felt "they were looting the non-profit."

"We are currently in phase three," he said.

At issue was a 2020 agreement with Microsoft that came with an investment from that company and would give it exclusive license for OpenAI's for the product. "This does seem like the opposite of 'open,'" Musk said.

According to Musk, Altman reassured him via text message that the product would remain open and available to all.

Musk said when he learned about an investment by Microsoft of $10 billion, he was disturbed and felt that the charitable trust had been violated because the size of OpenAI had grown beyond that of a charity. He said he felt Microsoft's investments indicated it expected a potentially large return, and he was concerned that Microsoft could come to control the development of artificial general intelligence, or AGI.

"With all due respect to Microsoft, do you really want Microsoft controlling artificial general intelligence?" Musk said.

"I reacted quite negatively," to the investment, he said, adding "I texted Sam Altman and said 'What the hell is going on?" or something to that effect."

"The reality is that OpenAI had become, with all intents and purposes, a for-profit company with a $20 billion valuation."

He said he did not accept equity because he felt it was not OK for a non-profit to have a valuation or equity holders.

"Frankly, it felt like a bribe," he said of Altman's offer to him at the time to take an equity stake.

Musk's testimony will continue later today under cross-examination from OpenAI's legal team.

Microsoft is a financial supporter of NPR.